The data from the latest quarterly report by the National Association of Realtors (NAR) also shows that the median existing single family home price increased in 73% of measured markets, with 125 out of 172 metropolitan statistical areas (MSAs) showing gains based on closings in the third quarter compared with the third quarter of 2013.
Some 47 areas recorded lower median prices from a year earlier but the number of rising markets in the third quarter was mostly unchanged from the second quarter, when price increases were recorded in 71% of metro areas.
Sixteen areas had double digit increases in the third quarter of the year, a sharp decline from 54 areas in the third quarter of 2013. Nineteen areas experienced increases in the double digits in the second quarter of this year.
According to Lawrence Yun, NAR chief economist, home prices in the third quarter continued to stabilise towards a healthier rate of growth. ‘Home price gains returned to more normalized levels of low to middle single digit rate of appreciation in many metro markets as inventory levels steadily increased,’ he said.
‘Moreover, there are a good number of local markets that are still remarkably affordable with median prices at or under $200,000,’ he added.
The national median existing single family home price in the third quarter was $217,300, up 4.9% from the third quarter of 2013. The median price during the second quarter of 2014 increased 4.2% from a year earlier.
Total existing home sales, including single family and condo, increased 5.2% to a seasonally adjusted annual rate of 5.12 million in the third quarter from 4.87 million in the second quarter, but are still 3.8% below the 5.32 million pace during the third quarter of 2013.
‘Given the improving labour market and historically low interest rates, more buyers are anticipated to enter the market next year,’ said Yun.
The data also shows that total housing inventory continued to make strides at the end of the third quarter at 2.3 million existing homes available for sale, which is 6% higher than a year ago. The average supply during the third quarter was 5.4 months compared to five months in the third quarter of 2013. A supply of six to seven months represents a rough balance between buyers and sellers.
NAR president Steve Brown said that traditional buyers are entering a more favourable market. ‘With inventory levels at a rate closer to supporting overall demand, bidding wars are occurring less, giving buyers more time to view homes and secure financing,’ he pointed out.
‘Additionally, Realtors across the country continue to report less investor activity and fewer all cash sales in their markets compared to earlier in the year,’ he added.
Distressed homes, that is foreclosures and short sales generally sold at discount, accounted for 9% of third quarter sales, down from 14% a year ago. ‘Distressed sales are becoming less prevalent in many parts of the country and will likely be in the low single digits percentagewise at this time next year,’ said Yun.
The national median existing condo price was $211,000 in the third quarter, up 2.7% from the third quarter of 2013 and 41 metro areas showed increases in their median condo price from a year ago while 20 areas had declines.
The five most expensive housing markets in the third quarter were the San Jose, California, where the median existing single family price was $860,000, San Francisco at $744,400; Anaheim-Santa Ana, California at $697,000, Honolulu at $677,600 and San Diego at $517,800.
The five lowest cost metro areas in the third quarter were Youngstown-Warren-Boardman, Ohio, where the median single family home price was $84,500, Cumberland at $93,200, Rockford, Illinois at $98,100, Decatur, Illinois, at $101,900 and Toledo, Ohio, at $107,000.
Regionally, total existing home sales in the Northeast rose 7% in the third quarter but are 5.2% below the third quarter of 2013. The median existing single family home price in the Northeast was $261,700 in the third quarter, up 2.2% from a year ago.
